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Music industry agrees to new mechanical royalty rates deal

There is little doubt that digital is the future of music. The CD may not be dead, but it might as well be.

Its replacement for millions of consumers has been digital music services of various kinds, ranging iTunes and the Amazon MP3 Store to Pandora and Spotify.

Unfortunately for the music industry, the transition to a digitally-dominated world hasn’t been easy. Music is arguably more popular and widely available than it’s ever been, but that doesn’t mean making money from it is getting any easier. Thanks to the ease with which music can be copied and shared, piracy has become a thorn in the side of the record labels.

But one of the biggest problems the recording industry has been forced to deal with is the licensing of its music to digital music services.

Yesterday, the industry took what it hopes is a step in the right direction on that front with the RIAA, National Music Publishers Association and Digital Media Association announcing a deal that will set mechanical royalty rates for digital music starting in 2013.

The most important part of the deal is the addition of five new categories to the Section 115 of the Copyright Act. This section deals with mechanical royalty rates, and if the deal is approved, going forward Section 115 will cover mixed service bundles, paid locker services, purchased content lockers, subscription-based service covering specific genres or playlists, and music bundles.

The Hollywood Reporter explained the significance of these additions:

By adding these services to the stream of mechanical royalty revenue, the industry hopes to avoid some of the controversies that have bedeviled past rate negotiations. Royalties on Internet music streaming have been a particularly contentious topic over the years, and the parties also spent quite a bit of time arguing whether statutory rates applied to new music products such as ringtones and ringbacks.

According to RIAA chairman Cary Sherman, “This is a historic agreement that reflects our mission to make it easier for digital music services to launch cutting-edge business models and streamline the licensing process.”

The proof, of course, will be in the pudding.

While it’s nice to see the recording industry agreeing to expand the mechanical royalty rates portion of the Copyright Act to cover the type of digital services consumers are demanding today, it would also be nice to see the industry ease up on its inane focus on consumer piracy, which has seen it suing grandmothers and promoting some of the worst legislation perhaps ever written.

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